Don Mattrick Exits Microsoft Ahead of Massive Reorg

Hapless Xbox chief Don Mattrick suddenly and unexpectedly left his position at Microsoft on Monday to take the CEO job at beleaguered game maker Zynga. While many are focusing on the Zynga part of this story, I think the bigger issue is what this says about Xbox and Microsoft. And there are hints that Mattrick’s departure was in fact partially related to a pending Microsoft reorg.

“This is a great opportunity for Don, and I wish him success,” Microsoft CEO Steve Ballmer wrote in a letter to employees. “Don’s direct [report]s will report to me and will continue to drive the day-to-day business as a team, particularly focused on shipping Xbox One this holiday.”

Ballmer then went on to describe the successes of the Xbox team during Mattrick’s six years in the firm’s Interactive Entertainment Business (IEB), while failing to mention two very high profile disasters that I believe doomed his tenure there: A record $1.1 billion warranty bill for the Xbox 360, which is regarded as the most unreliable consumer electronics device ever built, and the disastrous launch of the Xbox One, in which Mattrick played the primary role. Those events are his real legacy at Microsoft.

While Mattrick leaves Microsoft to help “Farmville” creator Zynga make a belated push into mobile gaming, the firm he’s leaving behind is prepping the most massive corporate reorganization in its history. And while the details of this reorg have been in flux since I first caught wind of it in April, it’s emerged that many of the key executives who will be displaced in this reorg are currently freaking out over the secretive way in which it’s being carried out. It’s highly likely that Mattrick wasn’t going to get a key role in the new Microsoft, and that this reality made a move to Zynga more interesting.

Speculating further, it’s impossible not to wonder if former Windows chief Steven Sinofsky caught wind of this reorg early on and left for the same reason. At the time of his departure in late 2012, Sinofsky was widely regarded as a possible CEO replacement for Mr. Ballmer, and Ballmer is infamous for culling such competition from positions of power at the company. With Sinofsky gone, there’s no clear leader to take over the “devices” part of Microsoft’s coming reorg, which would also include a “services” division. As a result, I’m now hearing that the firm will perhaps require three of four top-level divisions.

That Microsoft reorg is expected to hit at or before the firm’s Worldwide Partner Conference (WPC), which kicks off next week in Houston.